The hybridization of the wind and solar assets is likely to lower the capital cost by 5-7 percent compared to the cost of standalone wind and solar assets, thus improving the returns for the developers, said a report.

The ministry of new and renewable energy approved the National Wind-Solar Hybrid policy in May 2018 with an objective to reduce variability in generation and to improve the utilisation of common sources like land and evacuation infrastructure.

"Apart from the reduced variability in generation for wind-solar hybrid projects compared to standalone wind or solar projects due to the complimentary nature of generation, the hybrid projects would lead to savings in capital cost in view of the improved utilisation of common infrastructure such as land, approach roads and evacuation infrastructure," Icra group head - corporate ratings Sabyasachi Majumdar said.

As per Icra's estimates, the hybridisation of the wind and solar assets would lower the capital cost by 5-7 per cent compared to the cost of standalone wind and solar assets, thus improving the returns for the developers, he said.

"At a tariff rate of Rs 2.5 per unit and with a wind-solar mix of 50:50, the internal rate of return (IRR) for a wind-solar hybrid project is estimated to be higher by about 60-70 bps against a standalone wind or solar power project, with other things like funding structure, cost of debt, power purchase agreement terms and operation and maintenance cost remaining same." Majumdar added.

Subsequently, the Solar Energy Corporation of India (SECI) has issued a tender for procuring 2500 MW power from the hybrid plants to be set up anywhere in India and connected to inter-state transmission system (ISTS), under a 25-year power purchase agreement.

Icra, however, noted that the integration of a higher share of wind and solar power in the electricity generation mix would pose a challenge to grid security and stability.

"This is owing to the variation in generation from these sources, given the dependence on wind availability and solar radiation, respectively," it said.

On the flip side, Icra said, hybrid projects would face challenges related to the selection of sites suitable for both wind and solar power generation, availability of adequate transmission infrastructure, technical challenges in integrating the two generation sources and setting up systems to manage the generation from wind and solar resources.